Monday, September 04, 2006

Some interesting titter-tatter on the web in recent weeks about the size of the online travel industry and whether there are too many start-ups.

The theme pretty much goes like this: there is a bubble growing and at some point it may well burst, splattering unfortunate travel companies everywhere.

Travolution’s head is full of ten years of online travel at the moment, but this just seems like a bit of a flashback to 2000.

Katie Fehrenbacher, writing on the technology blog, GigaOM, says: “Every week we get news of online travel companies raising money, adding social and community features, and trying to diversify their sites in a variety of ways. Online travel is a relatively low capital business, a lot of investors and startups figure: why not try it out!”

But she asks whether “geo-political turmoil”, citing the recent alleged terrorist plots in the UK, will have a potentially fatal impact on the growing bubble.

Most industry figures point to the continued and phenomenal rise of online travel as an indicator that there is plenty of room left for start-ups, new ideas – and, ultimately, growth.

Chris Lake from E-Consultancy adds a rather telling comment on Fehrenbacker’s post.

“You could have a million travel start-ups and it still wouldn’t be a bubble,” he writes. “A bubble isn’t driven by start-ups but by smart/idiot financiers in VC [venture capital] firms and investment banks.”

As he points out: the term "bubble", according to Wikipedia, is a concept often fuelled by speculation. "I think we all need to quit talking about the Second Tech Bubble," he adds.

So why are people talking about bubbles again?

Despite the growth - are there elements in the industry getting nervous once more?